Franklin Templeton has signed a definitive agreement to acquire BNY Alcentra Group Holdings from BNY Mellon in a deal valued up to $700m.
The deal consideration includes a payment of $350m in cash at closing alongside up to a further $350m in contingent consideration, subject to achievement of certain performance thresholds over the next four years.
Franklin Templeton also agreed to purchase all seed capital investments from BNY Mellon related to Alcentra, which were valued at approximately $305m as of 31 March 2022.
The transaction is expected to conclude early in the first calendar quarter of 2023, following regulatory approvals.
Founded in 2002, Alcentra is a European credit and private debt manager with $38bn in assets under management (AUM).
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The firm specialises in senior secured loans, high yield bonds, private credit, structured credit, special situations and multi-strategy credit strategies.
It has a team of approximately 180 professionals working at its London headquarters, as well as in New York and Boston.
The deal will expand the alternative credit capabilities of Benefit Street Partners (BSP), Franklin Templeton’s US alternative credit specialist investment manager, and its footprint in Europe.
Following the transaction, BSP’s AUM is expected to double to $77bn globally.
Furthermore, the deal will bolster Franklin Templeton’s alternative asset strategies and increase the firmwide alternative assets under management to $257bn.
Franklin Templeton president and CEO Jenny Johnson said: “This acquisition expands our long-standing relationship with BNY Mellon, and we are pleased that the structure of the transaction achieves objectives for both Franklin Templeton and BNY Mellon in the context of current market conditions.”
Alcentra CEO Jon DeSimone said: “The global combination of Franklin Templeton and BSP’s highly complementary capabilities will enable us to collectively provide clients with solutions across the credit spectrum.”
BNY Mellon Investment Management CEO Hanneke Smits commented: “We’re extremely pleased to be strengthening the partnership with Franklin Templeton and continuing to offer Alcentra’s credit capabilities as part of the broad range of alternative solutions we already offer today.
“We look forward to ongoing collaboration with the combined institution through distribution and further building on BNY Mellon’s existing asset servicing arrangement.”